University of Pittsburgh Medical Center last week signed a letter of intent to acquire McKeesport (Pa.) Hospital, an affiliate since April 1996.
The full-asset merger, expected to close by year-end, would make 311-bed McKeesport a subsidiary of UPMC Health System.
Details of the merger are subject to a definitive agreement that has yet to be completed. However, the hospital would be renamed UPMC McKeesport, the institutions said.
When the deal closes, UPMC will have 13 hospitals in metropolitan Pittsburgh.
"In this age where collaborations and networks are essential for success, we are very pleased about this relationship," said Ronald Ott, president and chief executive officer of McKeesport.
The merger would shore up McKeesport's financial resources, enhancing residency programs and allowing expansion of community health programs, he said. McKeesport had $2.9 million in profits on $83.9 million in revenues for fiscal 1996, according to the Pennsylvania Health Care Cost Containment Council.
For UPMC Health System, McKeesport represents another step in the construction of a comprehensive network. The merger "establishes our presence in the Mon-Valley and East Pittsburgh suburban area," said Jane Duffield, a system spokeswoman.
Since July 1995, UPMC's Western Psychiatric Institute and Clinic has provided physician direction to McKeesport's in-house psychiatric center. As a result of that affiliation, McKeesport's psychiatric service has increased 50%. Both hospitals pointed to that success as a predictor for growth in other specialty areas.